A national security letter is an informal administrative letter the FBI can use to secretly demand customer records from ISPs, financial institutions, libraries, insurance companies, travel agencies, stockbrokers, car dealerships and others. NSLs have been used since the 1980s, but the Patriot Act, passed after the September 11, 2001 terrorist attacks, and a subsequent revision in 2003 expanded the kinds of records that could be obtained with an NSL.

With an NSL, the FBI does not need to seek a court order to obtain such records, nor does it need to prove just cause. An FBI field agent simply needs to draft an NSL stating the information being sought is “relevant” to a national security investigation.

The letters come with a life-long gag order, so businesses that receive such letters are prohibited from revealing to anyone, including customers who may be under investigation, that the government has requested records of transactions. Violation of a gag order can be punishable by up to five years in prison.

The gag orders raise the possibility for extensive abuse of NSLs, under the cover of secrecy. Indeed, in 2007, a Justice Department Inspector General audit found that the FBI, which issued almost 200,000 NSLs between 2003 and 2006, had abused its authority and misused NSLs.

In Merrill’s case, although the letter’s gag order “was totally clear that they were saying that I couldn’t speak to a lawyer” about it, he immediately contacted his personal attorney, and together they went to the ACLU in New York, which agreed to represent him.

“My gut feeling is I’m an American,” Merrill said, in an interview with Threat Level on Tuesday. “I always have a right to an attorney. There’s no such thing as you can’t talk to your attorney.

“I kind of felt at the beginning, so few people challenge this thing, I couldn’t just stand by and see, in my opinion, the basic underpinnings of our government undermined,” he continued. “I was taught about how sophisticated our system of checks and balances is . . . and if you really believe in that, then the idea of one branch of government just demanding records without being checked and balanced by the judicial just is so obviously wrong on the surface.”

Merrill and the ACLU filed the lawsuit under the name “John Doe,” challenging the legality of the letter and asserting that customer records were constitutionally protected information. Merrill said the NSL, which listed 16 categories of records, including e-mail and billing records, was “very broad.”

Please go read the whole thing.

The government having this much power is distressing. I think the notion of online privacy is itself a hoax. Consider this from Google’s CEO Eric Schmidt:

In an interview with CNBC conducted at the Techonomy conference earlier this month, Schmidt offered an additional look at his views on online privacy and anonymity, says the report.

Arguing that anonymity on the Internet is dangerous, Schmidt had reportedly said, “In a world of asynchronous threats, it is too dangerous for there not to be some way to identify you.”

He also said governments may eventually put an end to anonymity. “We need a (verified) name service for people,” he said. “Governments will demand it.”

“Privacy is incredibly important,” he said in another interview, adding, “Privacy is not the same thing as anonymity. It’s very important that Google and everyone else respects people’s privacy. People have a right to privacy; it’s natural; it’s normal. It’s the right way to do things.” But he said there should be limits to privacy.

Yep. When the government AND big business are not interested in privacy…well, your life is not private.